PALMOILMAGAZINE, JAKARTA – The Indonesian Oil Palm Smallholders Organization Association (POPSI) has expressed serious concerns over Government Regulation (PP) No. 24 of 2026 on the Governance of Strategic Natural Resource Commodity Exports, arguing that several provisions could create uncertainty in the palm oil sector and potentially affect farmer welfare.
According to POPSI Chairman General, Mansuetus Darto, the regulation appears inconsistent with the government’s stated objective of preventing under-invoicing and increasing foreign exchange earnings. Instead, he warned that the policy could introduce new governance risks through the authority granted to state-owned enterprises (SOEs) to determine export prices, collect trading margins, and administer exemption mechanisms for selected exporters.
Darto argued that the regulation raises fundamental questions regarding transparency in export price formation and its potential impact on the broader palm oil supply chain.
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In a speech delivered on May 20, 2026, President Prabowo Subianto stated that the new export system was designed to prevent under-invoicing practices that have allegedly caused losses in national foreign exchange earnings. However, POPSI believes that if preventing under-invoicing is the primary objective, the regulation should provide a clearer and more transparent pricing mechanism.
The organization also highlighted Article 4 of the regulation, which allows certain exporters to be exempted from the requirement to export through designated SOEs if they hold agreements with the government involving investment, divestment, or domestic processing and refining commitments.
According to POPSI, while the government seeks to address under-invoicing, the exemption mechanism could create uncertainty because decisions are subject to inter-ministerial coordination meetings. Such arrangements, the organization argues, may open the door to lobbying and unequal treatment among market participants.
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POPSI has identified a series of key questions that remain unanswered and believes the government should address them to maintain market confidence across the palm oil value chain, including among smallholders.
Among the issues raised are how export prices will be determined, how trading margins will be calculated, how much additional foreign exchange revenue the government expects to generate, what mechanisms will be used to prevent under-invoicing, and how export prices will be audited.
The organization also questioned how international buyers would be able to verify that export prices are fair and transparent, what objective criteria would be used to grant exemptions from the SOE export requirement, and whether companies receiving exemptions and the reasons behind those decisions would be publicly disclosed.
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According to POPSI, the lack of clarity surrounding these issues could undermine confidence in the new export system and create governance challenges for the industry.
The organization further noted that the regulation does not clearly quantify the additional foreign exchange earnings expected from the centralized export scheme. POPSI emphasized that trading margins collected by export SOEs should not automatically be equated with increased foreign exchange revenues for the country.
“If increasing foreign exchange earnings is the main objective, the government should clearly communicate the expected targets, the mechanisms to achieve them, and the benefits that will flow to society, including oil palm farmers,” Darto said in a statement received by Palmoilmagazine.com on Saturday (June 6).
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POPSI also warned of potential downstream impacts on smallholders. In the palm oil supply chain, additional costs incurred at the export level are often passed down through the marketing chain, eventually affecting the price of fresh fruit bunches (FFB) received by farmers.
The organization cautioned that if SOE trading margins become a new cost component in export transactions, the burden could ultimately fall on farmers through lower FFB prices.
“Should the export margin become an additional trading cost, the greatest risk is that smallholders may bear the consequences through reduced FFB prices. The government must ensure that this policy does not create new burdens for oil palm farmers,” Darto stressed.
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POPSI therefore urged the government to provide greater transparency regarding export price calculations, monitoring mechanisms, and farmer protection measures before the regulation is fully implemented. (P3)
